Welfare Reform and Work Bill (Eighth sitting)
Shailesh Vara Excerpts(9 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
I beg to move amendment 110, in clause 16, page 15, line 4, leave out “pay mortgage interest in relation to property” and insert—
“make owner-occupier payments in respect of accommodation”
This amendment replaces the description of the payments for which loans may be made with a reference to “owner-occupier payments” relating to the accommodation that persons occupy as their homes. The term will be defined in regulations (see amendment 116). This amendment also ensures that there is flexibility to provide support as regards all possible dwellings.
Mr Vara
It is a pleasure to serve under your chairmanship, Mr Streeter. For the sake of good order, may I refer colleagues to the Register of Members’ Financial Interests to the extent that anything therein applies and ought to be declared?
I welcome the new members to the Committee and I wish well those who served on it before, particularly the right hon. Member for East Ham, who spoke eloquently in his contributions here and will be sorely missed on the Front Bench of the Labour party.
The clauses will change the way in which claimants with outstanding mortgages receive help from income-related benefits. I will be absolutely clear at the outset. The Government remain committed to helping owner-occupiers in times of need to avoid the risk of repossession. However, we believe it is wrong that taxpayers who are unable to afford to buy a home of their own are subsidising claimants who own their own homes. Taxpayers support a significant asset from which many homeowners are able to profit. It is our intention that help towards mortgage interest payments should be taken in the form of an interest-bearing loan that will be recovered from available equity once the property is sold. In that way, we will be able to provide a better deal for the taxpayer while ensuring that claimants receive the protection from repossession that they currently enjoy.
Moreover, the amendments will ensure that we do not exclude claimants who have non-standard financing arrangements from the offer of a loan, for example where a person has entered into what are referred to as alternative financial arrangements for purchasing their property rather than a traditional mortgage.
Emily Thornberry
I am listening with care to the Minister because the change is radical compared with how things were done until now. I want to be clear about this. He has talked about the importance of protection from repossession, but can he confirm that the clause extends the period during which there is no assistance available when someone becomes unemployed from 13 to 39 weeks? Would it not make it more likely that homes will be repossessed if mortgage companies get no money at all for 39 weeks?
Mr Vara
I am grateful to the hon. Lady for giving me the opportunity to make that point. She will be aware that, before the introduction of 13 weeks in 2009, the period was 39 weeks. There was a specific reason why it was reduced by the then Government to 13 weeks: it was the height of the recession. It was very difficult to get jobs and it was felt necessary to make that adjustment. The economic climate now is a lot different from what it was in 2009. When there are record levels of employment —unemployment is very low—and when we have the prospect of an economy that is recovering, we feel the time period should be brought back to what it was previously. There was no concern when there was a 39-week period when there were better economic circumstances. With the economy picking up, we feel that, as 39 weeks was fine in the past under a Labour Government, there is no reason why it should not continue under a Conservative Government.
Emily Thornberry
The Minister says that he feels 39 weeks will be fine because it was fine under a Labour Government before the recession, but is the change to policy based on any evidence? Can the Government point us to any impact assessment or other information that will reassure us that homelessness will not be increased?
Neil Coyle
It is interesting that the Minister has absolute confidence in economic stability, but it is not shared by everyone. House prices are rising and falling at different rates, and different job opportunities are available, in different parts of the country. May I be the first to offer the Minister the moniker of Minister for repossessions?
Neil Coyle
It has been a long day. My point is that the Minister will become known as the Minister for repossessions as a result of a retrograde step. Labour changed that policy in government to ensure that, having contributed to benefits through national insurance, people had support if and when they needed it. The Government are taking that support away and the Minister will become known as the Minister for repossessions.
Mr Vara
May I gently say to the hon. Gentleman, who is new to the House of Commons, that, if he wishes to survive, he will have to get used to being called a lot of things?
We intend to ensure that, through the regulations, we cover financial arrangements alternative to traditional mortgages. The amendments will also ensure that claimants who live in non-traditional homes, such as houseboats or caravans, will also be offered a loan. It is important that support is available to protect the homes of all individuals, regardless of the type of accommodation they occupy. The amendments ensure that the technical detail about calculating the amount of a person’s liabilities to make owner-occupier payments, and the maximum amount of those liabilities that can be met with a loan, will be set out in regulations.
The amendments ensure that regulations made under clause 16 requiring security for a loan may make provision for situations where there are alternative financial arrangements for a home, and ensure that the security can be taken in respect of a legal or beneficial interest in the person’s home.
Clause 17 allows for the detailed framework within which loans may be made to be put in place by regulations. That will allow for the tactical operation of support for mortgage-interest loans, which will provide fairness for taxpayers along with protection from repossession for claimants. It will also continue the current administrative arrangements that mean that payments of support for mortgage interest go directly to the mortgage lender.
The amendments to clause 17 are consequential to the amendments to clause 16. They replace the description of the payments for which loans may be made with a reference to owner-occupier payments, which will be defined in regulations. They will ensure that the loan scheme will be available to eligible claimants who have acquired their home through alternative finance arrangements rather than through a traditional mortgage.
Amendment 120 seeks to clarify what requirements a person will have to meet before receiving a loan. It ensures that regulations under the clause may make provision about entering into agreements with persons receiving loans. The Secretary of State will be able to specify terms in the agreement that he thinks fit, subject to any terms set out in the regulations. That will ensure that the regulations do not have to include every term that is needed in the loan agreement.
Debbie Abrahams
My hon. Friend has hit the nail on the head. In fact, the Money Advice Trust has made exactly the same point and has expressed its considerable concern about extending the period from 13 weeks to 39 weeks. The experience of all lenders and advice agencies is that early intervention is the key to resolving—
The Chair
Order. The hon. Member for Islington South and Finsbury has tabled an amendment that we will consider later in our proceedings on this very issue. She may not necessarily want to emphasise the point at this stage. The intervention has gone on long enough that she may want to respond to her own colleague and then perhaps give way to the Minister.
Emily Thornberry
I am grateful to my hon. Friend. I appreciate that I sound like a cracked record, but it is about evidence, evidence, evidence. What is the evidence that this change will help us? What is the evidence that this will not increase the number of repossessions? Give us evidence and we would be interested, glad and reassured to hear it.
On the face of it, if someone does not pay back any mortgage for 39 weeks, their mortgage company will kick them out. A steelworker in Redcar might have a good mortgage, a family home and a good family wage one week, but the next week, they could be made redundant and no longer be able to pay their mortgage. The Government will not give them any assistance for 39 weeks. They would have no job and no prospects, and things could suddenly turn very nasty and difficult. Thirty nine weeks is a long period. They might be able to get a zero-hours contract. All I can say to that is: good luck with paying off a mortgage on a zero-hours contract.
As we said at the beginning of these proceedings, although the Government want to use the terms of clause 1 to be able to get up and brag about full employment or the progress towards that, we know that the definition of employment seems to be any work at all. The definition of employment is not the living wage, a wage that a family can live on or a wage that people can use to pay their mortgage..
Mr Vara
I would make two brief comments. The Council of Mortgage Lenders has not said that the 39-week wait will drive repossessions. That is an eminently respected organisation, and it would have said if it felt that was the case. May I gently remind the hon. Lady that though she was not an MP at the time, the Labour Government from 1997 to 2009 maintained a 39-week waiting period? It seems ironic that what was suitable for a Labour Government for so many years is now felt to be inappropriate for this Government, particularly when our economic record is on the up and far better than it was under the previous Government.
Emily Thornberry
I was an MP in 2005, and the difference was that there was real investment going on, homes were being built and the economy was working properly as opposed to fumbling along as it currently is and seemingly being fuelled entirely by rhetoric. It is all very well for the Minister to assert until he is blue in the face that everything is well, everyone is working, everyone is getting a great wage and there are no problems, but that is not the reality of people’s lives.
Mr Vara
That is very helpful. As the Government amendment deals with houses, what I am about to say will be very relevant, particularly given what the hon. Lady said. She spoke about the huge amount of house building under the Labour Government when she was a Labour Member. May I remind her that the past five years have seen more affordable housing built than in the 13 years of the Labour Administration?
Emily Thornberry
No. I do not agree. I am grateful for the Minister’s comments about the Council of Mortgage Lenders and its statement. I counter him with a statement from the Money Advice Trust:
“We strongly support the tabled Amendment 19, which would require that the waiting period before an application for a loan for mortgage interest can be made is retained at 13 weeks, instead of the proposed 39. Lenders and advice agencies alike know from experience that early intervention is the key to resolving financial difficulty. The proposed 39 weeks will mean that claimants will be well over six months in arrears with their mortgage by the time SMI starts to be paid—by which time it will be significantly more difficult for them to resolve their financial situation.”
There are arguments both ways.
It is important that we look at what will happen. The Government have said a great deal about pensioners, about how they will look after pensions, about the triple lock and about this Government being friendly to pensioners. Is not there a problem that this measure will affect pensioners as much as it will affect anyone else? The particular difficulty with pensioners is that if they are expected to take out a loan against their property instead of getting relief on the interest, increasingly they will lose ownership of that property. As pensioners it will be even more difficult for them to work. In fact, the idea of a pensioner is that they do not work. The policy will increasingly eat away at an asset that cannot be expanded.
Is that not an asset that, as a matter of social policy, the Government expect pensioners to use in many other ways? I will not get into a detailed debate about the cuts in social care. Let us just say that I think there have been cuts in social care. I am sure that the Minister thinks that social care is marvellous so let us leave it at that. Are not pensioners expected to be paying for their long-term care out of the asset that is their home?
Many pensioners may have been tempted by the Government’s deregulation of access to pension pots. Memorably, the previous Pensions Minister said that he would be intensely relaxed if people were to take their money out and spend it on a Bugatti or whatever it was. Of course, deregulation and the access to pension pots means that people will have access to their pension funds, which they will be able to spend in advance of their pension. They will be expected to use their houses to pay for social care and if they need assistance with paying off their mortgage, that mortgage will not be available for them in any other way; they will be expected continually to take out more of a loan on the equity of the property.
It seems that pensioners are getting it from every angle, which is very far from the rhetoric we heard at the party conference about how much the Tory party is a friend of pensioners. It is interesting that this is the first—I suspect it will not be the last—occasion in which the Government are changing the game. The Government say they want to help people make the right choices. Pensioners, of all people, may be unable to make choices. They are coming towards the end of their lives and their options are limited. They are expected to take yet another charge on the one asset of value that they have—to continually take out a loan on their property, which their children may be expecting to have to help pay off their student loans or to set up in life.
We have heard that the average age for people to set up their own home now is in their 30s. Quite often, they rely on their parents to be able to help. The rules are being changed for pensioners. This is blow No.1; we will see how many other blows there are for pensioners in the future. We will certainly ensure that pensioners hear the truth, which is that, despite the rhetoric, this Tory party which claims to be the friend of pensioners, is not. This is the first step in undermining all the promises the party made in its manifesto and at the last general election.
Mr Vara
I simply make two responses. On pensioners, the hon. Lady conveniently overlooks that it is often the case that the asset is increasing in value. She also overlooks that the loan will eventually be paid when the house is sold. It is therefore a question of balance, and we have to ask whether it is fair that those who do not own a property of their own are through their taxes helping to pay others who own an asset that is increasing in value.
As for healthcare, I simply say to the hon. Lady that for many of those securing help in healthcare there is unlikely to be an overlap in terms of the equity in their property, as many of them are mortgage-free and sometimes have a second income or another income. They would not probably qualify for SMI in the first place.
Amendment 110 agreed to.
Amendments made: 111, in clause 16, page 15, line 13, leave out
“amounts secured by a mortgage”
and insert “liabilities”.
This amendment and amendments 112, 113, 118, 122, 123, 124, 125 and 126 are consequential on amendment 110 which replaces the reference to mortgage interest payments with a reference to owner-occupier payments.
Amendment 112, in clause 16, page 15, line 16, leave out
“the mortgage relates to amounts used”
and insert
“a person’s liability to make owner-occupier payments was incurred”.
Amendment 113, in clause 16, page 15, line 18, leave out from “about” to “in” in line 19 and insert “—
(a) determining or calculating the amount of a person’s liabilities;
(b) the maximum amount of a person’s liabilities”.
Amendment 114, in clause 16, page 15, line 24, after second “a” insert “mortgage of or”.
This amendment ensures that regulations under clause 16 about requiring security for a loan may make provision for situations where there is no pre-existing mortgage over the person’s home.
Amendment 115, in clause 16, page 15, line 24, at end insert
“a legal or beneficial interest in”.—(Mr Vara.)
This amendment makes clear that regulations under clause 16 about requiring security for a loan may make provision for security to be taken in respect of a legal or a beneficial interest in the person’s home.
Ordered, That further consideration be now adjourned.—(Guy Opperman.)
Oral Answers to Questions
Shailesh Vara Excerpts(9 years, 2 months ago)
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Ian Blackford (Ross, Skye and Lochaber) (SNP)
4. What discussions he has had with the Chancellor of the Exchequer on ensuring that people accessing new pensions freedoms receive appropriate advice.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
Ministers in this Department have met and continue to meet the Chancellor and Treasury Ministers to discuss this and other matters. My Department works closely with the Treasury, as well as with the Financial Conduct Authority, to ensure that the requirement for individuals to take independent financial advice works as intended.
Ian Blackford
Has the Minister read the report from the Strategic Society Centre which points out a link between guaranteed retirement income and wellbeing? I am deeply concerned that we are not offering adequate protection to pensioners, given the choices that they face, and I ask the Government to look again at the question of promoting guaranteed income in retirement and to accept their responsibility to protect pensioners.
Mr Vara
I do not agree with the hon. Gentleman when he says that we are not taking our responsibility seriously. He will be aware that Pension Wise offers free impartial guidance that can be given by telephone, online or in face-to-face meetings, and that the Money Advice Service provides a free directory with more than 2,250 firms registered on it. That equates to more than 6,000 individuals who can give advice. In Scotland, there are 162 firms that can give such advice to people, so there are plenty of people out there, but if the hon. Gentleman knows of individual cases, I would be happy to hear from him.
Nigel Mills (Amber Valley) (Con)
Is the Minister aware that certain savers who have old, with-profits policies are being forced to pay for financial advice and to get a sign-off, sometimes on an insistent client basis? It can often cost them a lot of money to access their money under the new freedoms. Would the Minister be prepared to look at this matter again, in order to strike the right balance between providing the right advice and not pricing people out of the market?
Mr Vara
My Department is keen to ensure that the consumer does not miss out, and we are working closely with the Financial Conduct Authority to ensure that the rules and regulations are fit and proper. If my hon. Friend would like to bring any particular cases to my attention, I would be happy to look at them.
Yvonne Fovargue (Makerfield) (Lab)
Will the Minister tell us when the Government are going to publish the information on the take-up of the Pension Wise service, and what action they are taking to combat the scammers, who have scammed £4.7 million out of people in the first month of the new scheme?
Mr Vara
If the hon. Lady has any specific information on that, I would be happy to receive it from her. We will be publishing the figures on the take-up of the Pension Wise service in due course, but I do not have them at the moment. It is a relatively new operation, and we need to give it some time. In relation to dealing with scams, we are working with the Financial Conduct Authority and we are seeking to stem these scams and any others that there might be.
Clive Efford (Eltham) (Lab)
6. What assessment he has made of the effect of Government policies on the number of children living in poverty.
Graham Evans (Weaver Vale) (Con)
7. What steps he is taking to increase public awareness and understanding of the new state pension.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
We have begun a new media campaign for the new state pension. It will use the full range of communication tools, including press, radio and digital means. Material has been updated to be clearer, to engage people and to help them better understand what the changes mean for them.
Graham Evans
The basic state pension would have been £560 a year higher by the end of the last Parliament if it had been uprated by earnings alone. Does my hon. Friend agree that maintaining the triple lock gives pensioners the greater certainty about their security that they definitely deserve?
Mr Vara
My hon. Friend is absolutely right, and I am grateful to him for making that point in this House. It is important to remember, notwithstanding the tough economic climate, that we on the Conservative Benches have looked after the pensioners. We have given them security and the protection that they need, and I can assure the House that they will continue to have that protection with the triple lock.
Andrew Gwynne (Denton and Reddish) (Lab)
Does the Minister understand that a great number of women who were born in the 1950s feel that the Government did not adequately inform them not only about the changes to the state pension age affecting their retirement, but about the speeding up of that process? Will he look again at that basic unfairness for a group of women who have paid in but who are getting nothing out?
Mr Vara
May I gently remind the hon. Gentleman that the original increase in ages was started under a Labour Government? We have relaunched the campaign to ensure that the target group of people—those who are within 10 years of retirement from April 2016—take an active role in trying to find out how they will benefit under the new state pension.
Fiona Mactaggart (Slough) (Lab)
The Minister will be aware that the Association of British Insurers published figures this summer about the new pension freedoms which show that people with big pots are buying income drawdown and that people with small pots are cashing out. He knows that women live longer than men and that they have smaller pots than men, so what is he doing to ensure that women’s income in retirement is properly protected?
Mr Vara
Let me be absolutely clear: this Government will not dictate what anybody should do with their pension pots. What we have put in place is the means by which people—both men and women—can seek advice. As I mentioned earlier, there is the Money Advice Service, which has on its books more than 2,250 firms across the country that can give advice. It is for people to take that advice and then to decide. We will not dictate how people should deal with their money.
Kate Hollern (Blackburn) (Lab)
8. What recent assessment he has made of progress on rolling out universal credit.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
As the Minister will be aware, the previous Government agreed to lift the Pension Protection Fund cap imposed on long-serving employees’ pensions when a pension fund collapses. Will he tell the House when he will bring forward the appropriate legislation to make that happen?
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
I am grateful to my hon. Friend for his question. He will appreciate that I am not prepared to make an announcement about that at the moment. When I do make an announcement, he will be the first to know.
Greg Mulholland (Leeds North West) (LD)
Physical exercise and sport have been shown to have a very positive effect not only on physical wellbeing, but on mental wellbeing. What is the Department doing to encourage employers to encourage employees to take part in such activities, perhaps with flexible working hours to allow them to do so during the working day?
Oral Answers to Questions
Shailesh Vara Excerpts(11 years, 8 months ago)
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Mr Duncan Smith
We are not. We listen to councils and everybody else who talks to us about these things, and ensure that we adjust accordingly. In reality, more than £280 million is going in discretionary payments direct to councils over two years to resolve these issues. That is more than ever before and I believe it is enough. We are asking councils to make sensible judgments that benefit the maximum number of people—tenants and those on housing benefit—in their areas.
Mr Shailesh Vara (North West Cambridgeshire) (Con)
T8. What assessment has the Minister made of the support available to disabled people through the Access to Work programme?
The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
Last year 30,000 disabled people were supported through Access to Work. We have extended that programme and added an extra £15 million, and it is working very well.
Housing Benefit (Under-occupancy Penalty)
Shailesh Vara Excerpts(11 years, 9 months ago)
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Dr Whiteford
I will give way to the hon. Member for North West Cambridgeshire (Mr Vara).
Dr Whiteford
The problem of under-occupation will not be solved by shuffling people around. That will do absolutely nothing to resolve the underlying problems, which I think we all know are related to the supply of affordable housing.
Dr Whiteford
I will not give way; I am hoping to make some progress and I want to consider the structural issues we face.
Amid all the soundbites about spare bedrooms, there has been a failure to acknowledge the underlying shortage in affordable housing across the UK and the backdrop of changing population demographics. What makes the Government’s under-occupancy rules fundamentally unworkable is the mismatch between available social housing stock and the needs of tenants and prospective tenants. The scale of the problem varies across the UK, but in Scotland, for example, only 26% of homes available for social rent are one-bedroom properties yet 60% of tenants affected by this measure require a one-bedroom home. According to the National Housing Federation, in England there are twice as many people under-occupying two-bedroom homes than the number of one-bedroom properties that became available last year. No matter how we shuffle people around, not enough homes of the right size are available for affordable rent. That mismatch is entirely outside the control of tenants yet they are being punished for a structural problem not of their making.
Mr Vara
The hon. Lady is being most generous and I am grateful. Does she accept that it is important in this debate to ensure that the facts are clear? Under the previous Labour Government house building was at its lowest since the 1920s, and in the 10 years before this Government came to power social housing costs doubled. Does she accept that that system simply cannot continue?
Dr Whiteford
The hon. Gentleman is having a go at the record of the previous Government but he cannot abdicate all responsibility from previous Tory Governments who made it impossible for local authorities to build houses without them being sold off at below market value to tenants who bought them at knock-down prices. That underpins the whole shortage of supply and Government Members cannot pass off responsibility for having created the problem in the first place.
Housing in the social rented sector is by far the cheapest option for people on low incomes. In my constituency, a three-bedroom council house can be rented more cheaply than most one-bedroom flats. People who live in council houses already have limited choice about where they live and what sort or size of house they are offered. Councils and housing associations already go to great lengths to match tenants with a house of the right size, but they do not have enough one-bedroom properties to go round. Many councils allocate homes on a points-based system, which is the most transparent and fair approach, but they require considerable flexibility from prospective tenants in terms of the size, location and type of property they will accept. Demand exceeds supply. Anyone who knocks back the offer of a house because it has two bedrooms when ideally they need one bedroom may not get another offer. People cannot be picky and must take what is available.
Steve Webb
On the tax treatment of the wealthy, I understand that Britain’s millionaires are demanding a return to the halcyon days of Labour when they paid a 40% top rate of tax, not 45%, and when they paid 18% capital gains tax, not 28%. I hope he is proud of Labour’s record on not taxing high earners as much as we are doing.
Steve Webb
I am grateful that someone has brought a voice to the voiceless in this debate. I have heard nothing about the 250,000 people shamefully left in overcrowded accommodation by the last Government and the nearly 5 million men, women and children on housing waiting lists up and down the land. Their voice deserves to be heard, so I am grateful to my hon. Friend for his intervention.